Boryszew S A : Group reports profit in uncertain times

In Q2 2020, Boryszew Group ('Boryszew') generated revenues of PLN 1.2 billion and a consolidated EBITDA of PLN 86 million. Thanks to the optimization of production processes, the EBITDA was up by almost 7% quarter-on-quarter. The Group posted a net profit of PLN 37 million. In particular, Alchemia Group's performance improved, with revenues up by 30% and a positive EBITDA result of PLN 11 million.

The Group's long-term business diversification strategy allowed Boryszew to achieve satisfying results even in the times of coronavirus crisis. Out of the three Segments in which Boryszew Group operates, the Automotive Segment was hit the worst by the crisis - the spread of COVID-19 led to a global economic downturn and caused a total production freeze in the plants of the Segment's clients. As a result, the Group was forced to significantly reduce the activities of the Automotive Segment while waiting for the resumption of production of new cars.

'Despite the freeze in the automotive sector, thanks to the optimization of our production processes, the Automotive Segment's EBITDA result remained positive. In the reported period, the Segment generated revenues of PLN 266 million and an EBITDA of PLN 0.3 million. The positive result is a huge success of the entire team,' said Piotr Lisiecki, the CEO of Boryszew S.A.

Due to the pandemic, temporary shutdowns or a significant drop in production were reported by all clients from the automotive sector, which altogether account for 30% of the Metals Segment sales. Consequently, the revenues of the Segment dropped to PLN 912 million but its EBITDA grew by 11.1% quarter-on-quarter.

Despite unfavourable market conditions, Alchemia Group improved its performance relative to the previous quarter.

'The revenues of our steel companies from Alchemia Group grew by 30% and their EBITDA reached PLN 11 million. This was the effect of the ongoing restructuring efforts in the Group. We are currently working hard to restore Alchemia's position back to what it was before - a very strong market player, with history and tradition going back more than 200 years,' Piotr Lisiecki added.

In Q2 2020, Boryszew found itself in breach of the financial covenants, as it informed in its current reports released at the end of June and several days ago. The breach was mainly caused by a significant drop in EBITDA year-on-year, which was the result of two factors - the collapse of the automotive sector due to the COVID-related production freeze and a significant reduction in credit limits for trade credit insurance.

'The effects of breach of the covenants, which was mainly due to a drop in EBITDA and a rise in net debt, will continue to be noticeable until the end of this year. The decline in the GDP of EU countries, projected at over 8%, will have an impact on the results of the entire Group. For this reason, we will continue to suffer the consequences of the economic collapse at the beginning of the pandemic in Europe for some time to come. However, the banks are currently considering their decisions regarding the consent to the breach and, so far, they have positively assessed the Group's efforts connected to the situation,' Piotr Lisiecki explained.

In its Chemicals Segment, Boryszew continued to develop the newest ERG CleanSkin product line of virucidal liquids. In Q2 2020, two types of liquids were offered, and in Q3 2020, a new type, ERG CleanSkin FUN for children, was added, which further expanded the target customer base. As a result, in Q2 2020 the Segment generated a very strong EBITDA of 8.2 million PLN while its revenue amounted to PLN 44 million.

'On the positive note, the Q2 2020 EBITDA of the Chemicals Segment was record-high, which was mainly due to the swift launch of the ERG CleanSkin virucidal liquids. We continue to develop this product line by expanding the customer base for our products. Recently, we also opened an online shop exclusively dedicated to ERG CleanSkin to reach out to retail customers,' Piotr Lisiecki stated.